The political economy of environmental decision making

The purpose of this paper is to investigate environmental policy making from a positive point of view. Unlike traditional normative economic policy analyis, this paper is thus not concerned with advancing policy recommendations for the benefit of the policy makers. Jts objective is rather to explain why environmental policy is conducted in the manner actually observed. In particular 1 will address the following two crucial questions: Firstly, why is the level of environmental protection not higher considering the extent of pollution, and, secondly, why do governments tend to employ inefficient Instruments if and when they attempt to deal with environmental problems at all. Before proposing answers to these two questions in sections 6 and 7, 1 briefly discuss the causes of environmental pollution (section 1). investigate the conditions under which state intervention in the economy is really warranted (section 2) and give a summary of the available environmental policy instruments (section 3). Section 4 then presents the basic structure of the political-economic approach and section 5 reviews the main types of models which are employed in endogenous policy theory to portray the political process. In the concluding section 8 a topical issue is addressed: I attempt to shed some light on the relationship between environmental concerns and international trade.